Socialism, the Cure for Our Mistakes

The economy and the money supply are contracting. Corporate earnings are abysmal and people are selling assets to raise cash. The government has nationalized the banking system (GM and Chrysler are next). They have loaned AIG 143 billion dollars and now the company teeters on bankruptcy (it could stop being a loan real quick). Incompetent Ben and Hank are the fools in charge. Hundreds of billions in loans will never be repaid, and no one is listening. No jail time here. Ask yourself one question; “What horrific disaster occurred that prompted the government to spend these massive sums of money?” Was it an earthquake, a hurricane or a famine?

The government right now wants to help everyone who bought a house that is left holding the bag (upside down). The Seller is in “Retirement City” enjoying the price they got for that "Fixer Upper." The taxpayer will cover the new buyer’s losses as the home’s value drops; such a deal!

Let’s see if I have it right. It’s OK to make money. But if there are massive losses in the private sector, the government will cover the losses. Free enterprise is for profits and socialism is for the losses. It's so simple even a caveman (Congressman) can understand the principle.

Last month half of all houses sold were foreclosures or REO’s. That doesn’t sound very promising for the economy. Enter the government who now provides “liquidity” to the banks for home loans. There is only one question on the new bank loan applications; “Do you have a job?” This is a tad more selective that the previous “Fog a Mirror” test for a home loan. No need to check the buyer out too closely, the loan will be government insured;

Senator Barney Frank wants to make sure that the banks are loaning the money for home loans rather than fixing their bottom line. "A dollar down" moves you into an REO and of course there is a bonus check up front (for needed repairs). The lien holder [insert nationalized bank name here] gets 50 cents (a guesstament) on the dollar payoff on the old loan. From here, the bank sells the new loan to Freddie or Fannie.

The program makes sense, to those that never did well in math. No closing costs, no money down, cash back and live rent free for 8 months then move back in with Mom and Dad. The people who have lost homes to foreclosure probably don’t qualify yet (Senator ‘Sesame Street’ Frank will probably fix that). Just wait for your kid to come home and give you the good news, “Dad I just bought a home for a dollar down!”

Frank wants the banks to loan more money (pushing on a string comes to mind). You'll need more that a toaster for bait. Nobody, right now, is in a hurry to buy a house, but there are a couple of million people wanting to sell you one before prices drop even lower.

You kind of wonder what we are getting for 4 trillion dollars, besides an education. I guess there is no real reason to worry; no one was ever serious about paying off the national debt, it just wasn't supposed to get this big. It is utterly amazing how this financial meltdown has produced so much destruction with very little physical damage. Nobody saw this coming, but to say the cure is obvious doesn't ring true. Welcome to the world of socialized finance. Our kids get the bill and Congress has exceeded our wildest expectations of gross incompetence.

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